The surge of gold ended on Wednesday, as it approached the 1,485.00 level. The end of the surge was followed by a drop to the 1,475.00 level, where the price began to consolidate.
The metal had two possible near term future scenarios, based upon whether the 1,475.00 manages to continue to provide support.
Since Monday, December 2, the US Dollar has been depreciating against gold. The Greenback has already lost 1.50% or 2196 pips against yellow metal.
Most likely, the Greenback is pressured by various fundamental events. Firstly, on Monday, the World Trade Organization rejected the EU claims for providing subsidies to Airbus. Thus, the US could increase tariffs on more European goods.
Also, on Monday, Cuba took another step to end dual monetary system, and two department stores in Havana began to give change only in pesos.
Moreover, the US President Donald Trump announced tariffs on the US steel and aluminum imports from Brazil and Argentina. Trump claimed that the given countries control devaluation of their currencies, and it was harmful for the US farmers.
According to analysts, the Greenback was also pressured, as the US factory activity has been declining for four months. Also, the US construction spending dropped in October.
On Tuesday December 3, the EU representatives said that the union was ready to reciprocate in case the US would impose tariffs on the French products worth $2.4B.
All these events could negatively affect the demand for the US Dollar, as trade flows could decrease significantly.
Economic Calendar Analysis
On Wednesday, there are two US events that the media will pay attention to. The ADP Non-farm Employment Change at 13:15 GMT and the US ISM Non-Manufacturing PMI at 15:00 GMT.
On Friday, the US Employment data sets will be published at 13:30 GMT. The event consists of three numbers – Average Hourly Earnings, Non-farm Employment Change and Unemployment Rate.
Meanwhile, the week's scheduled event historical data and reaction tables have been published. Click on the link below to read the article.
XAU/USD short-term forecast
It is likely that yellow metal could gain support of the monthly PP at the 1,475.51 mark and continue to extend gains against the US Dollar. In this case the rate could target the psychological level at 1,490.00.
On the other hand, gold could trade sideways against the US Dollar at the 1,480.00 mark within the following trading session. Also, it is unlikely that bears could prevail, and the rate could drop lower than the Fibo 23.60% at 1,462.89.
Hourly Chart
On the daily candle chart, the commodity price has reached the technical resistance of daily simple moving averages. On Wednesday, the 55 and 100-day SMAs were located at 1,486.50.
These levels need to be passed for the price to reach for the 1,500.00 level.
Daily Chart
Some traders take profits
Since Thursday, 62% of open gold position volume was in long positions.
On Tuesday, the situation changed and 59% of open position volume was in long positions. By the middle of Wednesday's trading, the sentiment was 57% long.
Meanwhile, in the 1000 base point range around the current metal's price the pending orders were set to sell– 52% of orders were to sell and 48% to buy.
Previously, the orders were 56% to sell.
In general, short term traders had been taking profits from the surge during the last two days.